Khalid Shaikh Mohammed, the alleged mastermind of the 9/11 attacks on New York and Washington, will be tried by a military commission in Guantánamo. It is the latest retreat by the Obama administration from its much-vaunted plans to overhaul the legal processing of terror suspects.

Mohammed and four other terror suspects will be put on trial through a military system that President Obama had vowed to abolish when he began in office in January 2009. The White House had declared its intent in 2009 to push them through the civilian justice system with a landmark trial at the federal court in Manhattan, a stone's throw away from Ground Zero.

But the proposal invoked a groundswell of opposition, most powerfully from New York residents and the mayor of the city, Michael Bloomberg.

The US attorney general, Eric Holder, was expected to announce the administration's U-turn at a press conference in Guantánamo.

The about-face is hugely symbolic as Mohammed was al-Qaida's main architect of 9/11, according to the commission of inquiry into the terrorist outrages convened in New York. How he is treated arguably sets the tone for America's legal handling of terror suspects.

Obama had wanted to bring that legal process back into the norms of civilian justice. But he was thwarted by a wall of opposition from Republicans in Congress, backed by some Democrats.

Republicans inserted a provision into the latest defence budget effectively banning the use of Pentagon funds to transfer Guantánamo detainees to the mainland, thus blocking any civilian trials. Obama initially promised to repeal the restriction, but last month he backtracked by allowing the resumption of military commission trials at the US base in Cuba.

Bloomberg also did a volte face. Initially, he approved the idea of a civilian trial for Mohammed in downtown Manhattan, but then turned against it, arguing that it would cost the city more than $400m (£248m) in security alone.

Other opponents claimed that it would again make New York the target of terrorists' wrath.

Never Forget, a group of family members of victims of the attacks, as well as emergency workers and former military personnel, welcomed the announcement. "We are relieved that President Obama has abandoned his plan to try the 9/11 conspirators in a civilian court on US soil. Prosecuting war criminals, whose only connection to this country is the location of their victims, in military commissions is the right thing to do."

• This article was amended on 5 April 2011. The original headline referred to Khalid Sheikh Mohammed as the mastermind behind 9/11. This is an unproven allegation. The headline has been corrected.